On 1 January 2019, Ilham Bhd purchased a landed property at a cost of RM1,750,000. The building is rented out to a tenant. Ilham Bhd also incurs the following costs in connection with the purchase of the property:

	RM
Legal and agency fees	52,500
Renovation for the construction of a new room in the property Cleaning services annual fee	65,000 5,000
Administrative expenses	1,000
	123,500

The property is classified as investment property and accounted for under the fair value model. At 31 December of 2019, the market value of the investment property is RM2,750,000. At 31 June 2020, the property was sold to the existing tenant for a consideration of RM2,870,000.

Required:

1. Name the relevant MFRS to be applied for the above transaction. Explain why you say so. (4 marks)
2. Calculate the cost of the property on initial recognition. (4 marks)
3. Briefly explain why some of the items mentioned above are not capitalized and explain how they should be recognised instead. (2 marks)
4. Calculate the gain or loss on disposal and prepare the journal entry for the disposal. (10 marks)

(20 marks)

B.

ABC Berhad acquired land and building for RM48,000,000 on 1^st July 2018. Legal and other expenses incurred amounted to RM2,000,000. The building has ten floors and nine of the floors are rented to its subsidiary and one floor is used by ABC Berhad.

The fair value of the property as at 31 December 2018 was RM58,000,000 and at 31 December 2019, RM54,000,000. The economic life of the property is determined as 20 years. ABC Berhad has adopted the fair value model.

Required:

Discuss the accounting treatment for ABC Berhad and for ABC Group. The financial year end is 31 December.

(10 marks)